Following on from his bestselling The Kingdom: Arabia and the House of Sa'ud, published 30 years ago, royal biographer and historian Robert Lacey now relates the dramatic everything that came after: the growth of terrorism, the souring of the US-Saudi relationship and the kingdom's agonising engagement with the modern world.

The society that leaps from these pages is repressive to an almost unimaginable degree. Daily life is a cocktail of cane-wielding religious police, a restless and angry youth, volleys of death threats for dogma-defying teachers, and the continuing intolerance of women drivers – a shibboleth of western fascination for this secretive kingdom, and a misleading one: Bedouin women have long driven around the desert, but the breach of this convention (it's not a law) by urban women still leads to arrest and ostracism.

Lacey also offers a brilliant glimpse into the delicate machinery of government, and the constant tension between 'ulema (religious establishment) and monarchy. In contrast to the office-holding ayatollahs in Iran, where the clergy seized power in 1979, the Saudi 'ulema has always shown a "reflexive loyalty" to monarchy. But their persistent demands for piety in the 70s and 80s would hopelessly skew the balance of power.

The turning point was the hijacking of the Grand Mosque in Mecca in 1979, a violent protest at the country's perceived ungodliness, which struck at Islam's holiest sanctuary. The answer, King Khaled decided under clerical pressure, would be more religion. Thereafter laws were tightened, school curriculums shrunk to little more than religious instruction, and "the petrodollar," says Lacey, "went pious".

The result was a crop of Islamic extremists who dreamed of messianic purity and the path of international violence to achieve it. One such was Osama bin Laden, the soft-spoken head of the eponymous conglomerate (the Saudi distributor of Snapple) whose treasonous rhetoric would keep him in exile from 1994. Lacey underlines the bewilderment felt when al-Qaida finally struck US soil in 2001, and both governments' protests that the US-Saudi relationship had nothing to do with it.

"After Allah, we trust the United States," said King Faisal in 1962 of a marriage that would prove fatally contradictory. American funding of jihadists in Afghanistan in the 80s, an alliance with the House of Saud, and visceral support for Israel at the expense of Arabs would, says Lacey, "provoke more death and destruction in the mainland United States than 45 years of cold war".

This is essential reading for anyone with a passing interest in Saudi Arabia.